February delivers flat trading for pub and restaurant groups

17 March 2016

Collective like-for-like sales flat

London sees best of trading

Managed pub and restaurant groups saw sales growth flatten out in February. Latest figures from the Coffer Peach Business Tracker reveal a 0.0 per cent like-for-like sales rate for the month against the same period last year.

'The numbers will be a disappointment for the sector, coming on the back of a bright start to the year, with January like-for-likes up 1.9 per cent, but they reflect a growing sense in the market that 2016 will be a tougher year than last,' said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group, RSM and UBS.

Total sales for the month among the 31 companies in the Tracker cohort were up 3.2 per cent on 2015, reflecting the continuing impact of new openings and investment in sites, particularly among restaurant groups outside of London.

'However, we are also seeing the rate of restaurant openings slow this year, as the market perhaps becomes a little more cautious,' added Martin.

Greater London had the best of February’s trading, with like-for-likes ahead 0.9 per cent, against a 0.3 per cent decline in the rest of the country.

'This may be something to do with the school half term holidays. Casual dining chains collectively also did better than the wider pub and bar market, with like-for-likes up 1.6 per cent on February 2016 against a 0.8 per cent fall for managed pubs,' said Martin.

'Our CGA Peach Business Leaders survey, carried out among 260 senior executives in January, shows confidence about the market still high, with 75 per cent either optimistic or very optimistic. However, that is down on the 93 per cent recorded this time last year,' observed Martin.

The underlying annual trend shows sector like-for-likes running at 1.7 per cent up for the 12 months to the end of February, with out of London just marginally ahead of the capital.

'The market continues to show ‘steady as she goes’ progress in terms of overall sales, with like for like figures being pegged back by the rate of new openings. In spite of insatiable operator demand for sites, the rate of new openings does appear to be slowing slightly, which is a trend we expect to see continue for much of 2016. Although consumer confidence is steady, we expect to see some business investment decisions held back until after the referendum which could lead to increased corporate activity in Q3 and Q4 of 2016.'

'Although disappointing, it comes as no real surprise that the surge in supply and convergence across eating and drinking-out formats is now starting to slow growth and put downward pressure on like-for-like sales. Competition among operators is set to intensify and the winners will be those who can best balance site expansion with innovative menu development and competitive pricing.'

Jarrod Castle, Leisure Analyst at UBS Investment Research, observed that the flat LFL trading in February was in contrast to January at +1.9 per cent and December at +1.8 per cent, adding: 'The 12-month moving average LFL growth rate also came in at 1.1 per cent against 1.3 per cent in January and 1.2 per cent in December.'

The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 31 operating groups, and is recognised as the established industry benchmark. CGA Peach is part of CGA Strategy.

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